US inflation cheer

Energy prices fell 0.5% in May from the previous month

US wholesale prices were unchanged in May from the month before.

The weaker-than-expected figures suggest that US inflation is under control and eases concerns that the US central bank, the Federal Reserve, will continue its aggressive interest rate rises.

Analysts had been predicting a 0.3% rise in the producer price index.

The index measures prices charged to factories and firms before they reach the consumer.

But the closely watched core PPI, which strips out volatile food and energy costs, was a little higher than expected, rising 0.2% on the month.

Among the components that make up PPI, energy prices fell by 0.5% in May from April after falling 4.1% the month before.

Petrol prices were 1.3% higher in May after a 11.7% decline in April, while passenger car prices were up 0.9% in May after rising 0.4% in April.

The US stock markets rose at the opening on the news.

Rates expected to hold

Traders are betting that the lower than expected headline figure will dissuade the Federal Reserve from raising rates at its next meeting scheduled at the end of this month.

While other market watchers said they expected rates to remain steady at the meeting, they did note that the central bank would likely look at other key economic data for direction.

"At this point, if the Fed is still thinking about taking a pause from its tightening cycle, people will start looking at economic growth numbers for guidance," said Saumil Parikh, economist at UBS Warburg.

Analysts said the Fed would also closely watch consumer price inflation figures to be released next Wednesday.

"I don't think this will influence the Fed governors that much. They will be looking to see if it carries through to the consumer in the CPI number, " Chris Dickerson, analyst at Global Market Strategy, said.